Retirees and the PUMA Health Charge
Wednesday 11 March 2020
Retirees in France escape liability to the PUMA health charge, but for some households that may change next year.
Although business owners and salaried employees in France pay social insurance contributions (cotisations) that grants them pension, health cover and other rights, for those who are ‘economically inactive’, access to the health system is without any such reciprocal obligation.
Retired expatriates from the EEA who hold an S1 certificate pay no health insurance charge; their health cover is provided by their home country, so they are not, technically speaking, affiliated to 'PUMA', the universal health system.
The overwhelming majority of other pension households and early retirees, whether from within or outside the EEA, also escape liability.
They do so because the health charge, called the Cotisation Subsidiaire Maladie (CSM), is not payable by those in receipt of a pension or annuity. Article L380-2 of the social security code states that individuals are only liable if:
'Elles n'ont perçu ni pension de retraite, ni rente, ni aucun montant d'allocation de chômage au cours de l'année considérée. Il en est de même, lorsqu'elles sont mariées ou liées à un partenaire par un pacte civil de solidarité, pour l'autre membre du couple.'
Note that clause grants exemption to a couple, even though only one of them may be in receipt of a pension.
We have pointed out in the past that, in relation to early retirees, the scope of the exemption is being generously interpreted, as officials have made no distinction between State retirement pensions and early retirement pensions, the latter called ‘pensions de préretraite’. Both groups are exempt from the charge.
Whether that is by accident or design is not clear, but it is surprising that early retirees who were liable under the previous incarnation of PUMA, the Couverture Maladie Universelle (CMU), now escape the charge.
The explanation for this may be no more complicated than a problem of data collection. Although URSSAF, the social security collections agency, is responsible for sending out the invoice for the charge, it does so from information provided to it by the tax authority, who may simply be unable to provide a list that distinguishes early retirees from State retirees. Tax returns merely record pension income.
However, recent guidance published on the URSSAF website casts some doubt whether the exemption will continue.
Thus, URSSAF state those with foreign pensions are only exempt:
'Si elles n’exercent pas d’activité professionnelle complémentaire en France, la cotisation subsidiaire maladie n’est pas due par les personnes résidant de manière stable et régulière en France et percevant une pension de retraite d’un Etat relevant de l’Union européenne ou de la Suisse.
Pour les pensions de retraite servies par un Etat hors Union européenne ou la Suisse, la perception de cette pension permettra d’exonérer la personne uniquement si la prise en charge de ses frais de santé, ainsi que ceux des membres de sa familles qui résident avec elles, est supportée définitivement par le régime étranger qui sert la pension de retraite.
Although a little ambiguous, URSSAF does appear to be saying that only State retired foreign pensions are exempt, and it also makes a distinction between EEA and non-EEA pensions, with households in receipt of non-EEA pensions only exempt if their home country also assumes responsibility for their health costs.
If the same can be inferred in the case of EEA pensions, URSSAF may well be saying that foreign pension households are only exempt if their home country also assumes their health costs.
It is questionable whether such an interpretation is legal, as the legislation makes no distinction between French and foreign pensions and does not make exemption conditional on the home country picking up their health costs.
Nevertheless, if URSSAF were to adopt this approach (data collection permitting), it is possible that from 2021, when the transition period between the UK and France ends, retirees not in possession of an S1 may become liable to the charge. Indeed, it may even be applied earlier, but we need to wait until the demands for 2019 are send out at the end of this year to find that out.
That potential liability does not, however, mean they will necessarily incur the charge, due to the income test that is applied.
Under the law, only those individuals who have no professional activity (or one that generates less then €8K pa), but capital income in excess of €20,000 net per year, pay it.
Capital income is that from investments and rents, as well as capital gains. Such income is called 'revenus de patrimoine'. The rate of the charge on such income is 6.5% on income/gains above €20K pa.
In addition, under the terms of the Withdrawal Agreement between the UK and the EU, State retired pensioners in receipt of an S1 before the end of the transition period on 31st December 2020 will continue to be covered by the UK for life. Early retirees relocating before this date also have an entitlement to an S1 when they reach State retirement age and in receipt of a UK State pension. The UK government states on its website: 'If you’re living in France or move there permanently before 31 December 2020, you’ll have life-long healthcare rights in France as you do now, provided you remain resident.'
Most pensioners and early retirees can probably, therefore, breathe a sigh of relief.
Do please continue to tell us about your own experience. You can contact us at firstname.lastname@example.org.
You can discuss your health insurance requirements with our English language speaking health insurance partner, who is able to offer competitive policies for both private health and 'top-up' cover.